Formula 1’s Commercial Rights Holder Libery Media has confirmed its commitment to the sport despite the fact that its revenues declined by $200 million in the first quarter of 2020.
In an online report revealed by Liberty Media, the American company has announced that the first quarter of the year has resulted in huge drop in financial terms compared to the same period in 2019.
F1 Chairman and CEO, Chase Carey stressed that Liberty Media is working on ensuring the long term future of Formula 1 despite the challenging times the world is currently experiencing.
“We are thankful to the FIA, teams, promoters, our employees and other key partners for their support and efforts during this challenging time. We are moving forward with our 2020 plans while working to strengthen the long term future of Formula 1 through new technical, sporting and financial regulations that will further improve the competition and action on the track and make it a healthier business for all involved.”
Primary F1 revenue is comprised of race promotion fees, broadcasting fees, advertising and sponsorship fees. While the sport has generated an income of $246 million in the first quarter of 2019, it has only produced an income of $39 million in the same period of time in 2020 which means a drop of 84 percent.
This huge slump is mainly the result of the cancellation of the Australian and the Bahrain Grands Prix which were due to take place during the month of March. With both races having been called off, Liberty Media did not receive the race promotion and broadcasting fees, their two major incomes.
The revenue generated in the first three months of 2020 was solely associated with none-race related rights that were recognized during this period. Similarly, revenues recognized from the Paddock Club and other event-based activities have also decreased to zero. With no races planned for the second quarter of the year, the company expects no income from promoters and broadcasters.
Operating loss increased in the first quarter. There was no team payment expense recorded since such payments are recognized on a pro-rata basis across races on the calendar.
Despite no races taking place in the first quarter of 2020, certain costs were incurred during the period. As the Australian Grand Prix was called off at the scene, the preparation for the event involved freight, travel and technical costs.
In order to guarantee the financial well-being of the sport, “F1 implemented certain cost-cutting measures, including salary reductions and UK government-supported furloughs affecting approximately 50% of its employee base, effective April 3, 2020, which did not impact first quarter results but will impact the second quarter,” read the Liberty Media statement.
Greg Maffei, Liberty Media President & CEO said that has taken delight in the way that his company has reacted to the unprecedented challenges the coronavirus outbreak has caused in recent months.
“We are operating in unprecedented times, impacting the Liberty portfolio across the globe. Our companies in the live event space have been working with players, teams, bands, fans and government authorities to operate during social distancing and safely provide unique and engaging experiences. We thank our employees and partners for their dedication, flexibility and leadership.”
“We were pleased to complete the reattribution between Formula One Group and Liberty SiriusXM Group in April. Liberty SiriusXM now includes Live Nation, a complementary business and an established leader in the entertainment space. SiriusXM posted solid first quarter results and the business is proving resilient. Formula One Group has a strengthened balance sheet which will enable us to enhance the F1 business and be opportunistic,” he said.